HB 90-TAX CREDIT: SALMON DEVELOPMENT/UTILIZATION  SENATOR GARY STEVENS, sponsor of HB 90, gave the following explanation of the measure. HB 90 is the result of a recommendation by the Salmon Industry Task Force to expand the economy in the area of fisheries by encouraging new investment to retool processing plants and raise the value of salmon products. The Administration supports this measure. HB 90 provides two investment tax credits: the first credit is for salmon product development; the second is for utilization of salmon. The purpose is to improve the marketability of new value added products, to diversify salmon products, and to encourage full utilization of salmon parts. Alaska salmon is a premiere product in the food market but an enormous increase in the supply of salmon over the last few years has caused a tremendous decrease in its value, threatening the livelihood of thousands of people who depend on the industry. HB 90 will help to improve Alaska's position in the salmon market and to develop value- added salmon. SENATOR BEN STEVENS clarified that fiscal note number 1 applied to CSHB 90(FSH), which was amended by the House Finance Committee. Fiscal note number 2 applies to the House Finance Committee version, which is before members. CHAIR OGAN commented that the federal government's investment tax credit was a factor in his decision to invest and expand his business. He said, like a lot of fishermen, he was a sole proprietor. He asked if this bill provides a $49,000 tax credit. SENATOR BEN STEVENS explained the $49,000 in the fiscal note relates to the increased cost of personnel anticipated by the Department of Revenue. He pointed out the House debated the fiscal note and the fact that it is indeterminate. No one knows how many industry participants will use this investment tax credit. The House concluded that the potential cost to the state could be anywhere from zero to $2.8 million because in FY 03 the fisheries business tax collected by the state will be $5.6 million. If the tax credit is fully utilized, it could cost $2.8 million. He added that the fisheries business tax is levied against persons or businesses that buy fish for reprocessing or resale but the tax credit will be limited to salmon fisheries businesses. In the year 2000, that tax revenue amounted to $14.7 million; in 2001, it was $11.2 million; in 2002, it was $8.5 million; and the anticipated revenue for 2003 is $5.6 million. He said the other question to ask is, under that rate of decline, what will happen if the state does not provide an incentive to invest in the salmon industry. SENATOR GARY STEVENS told members half of the projected $5.6 million fisheries business tax will go to the communities; half will go to the state. 4:20 p.m.  CHAIR OGAN informed members that he planned to hold CSHB 90(FIN) in committee today and that Landa Baily from the Department of Revenue was available to answer questions. SENATOR ELTON commended the members of the Salmon Industry Task Force who were behind this idea. He sees this as a keystone issue because success in the marketplace depends on varied product form. He pointed out that 25 years ago, whole turkeys were the only turkey products on the market. Turkey is now on the market year round because it is available in many different product forms. The salmon industry needs to catch up and CSHB 90(FIN) will provide a way to get the technology to help the salmon industry do that. He said he does not object to holding the bill in committee, but he hopes this legislation can move through the process quickly because businesses are making decisions predicated on the next season right now. CHAIR OGAN said he believes there is precious little investment capital in the salmon industry right now. He said if the committee is ready to move the legislation, he would be willing to do so. SENATOR WAGONER told members that about 14 years ago, a similar program was available to shore based processors, which worked very well. CSHB 90(FIN) goes a bit further. He said he would support the legislation. SENATOR SEEKINS said he is sure this legislation has been [scrutinized] by Senator Gary Stevens and Senator Ben Stevens. He trusts their lead and feels comfortable with the bill. TAPE 03-30, SIDE B  SENATOR DYSON moved CSHB 90(FIN) from committee with its indeterminate fiscal note. CHAIR OGAN announced that without objection, the motion carried.